F.H.M. Verbeeten

Performance management practices in public sector organizations: Impact on performance

Purpose - The aim of this study is to investigate whether performance management practices affect performance in public sector organizations. Design/methodology/approach - Theoretically, the research project is based on economic as well as behavioral theories. The study distinguishes amongst quantitative performance (efficiency, quantities produced) and qualitative performance (accuracy, quality, innovation and employee morale) and uses survey data from 93 public sector organizations in the Netherlands. Findings - The research shows that the definition of clear and measurable goals is positively associated with quantity performance as well as quality performance. In addition, the use of incentives is positively associated with quantity performance yet not related to quality performance. Finally, the effects of performance management practices in public sector organizations are affected by institutional factors. The results suggest that the behavioral effects of performance management practices are as important as the economic effects in public sector organizations. Research limitations/implications - All limitations of survey research apply. The survey is based on public sector organizations in The Netherlands; findings may not be transferable to other countries. Practical implications - The joint introduction of performance management practices may provide an opportunity to increase quantity performance yet may have no impact on quality performance. Originality/value - The paper responds to previous calls in the literature to use quantitative research methods to generalize findings from previous case studies. Also, the paper empirically tests the impact of performance management practices on performance, an area that has attracted scarce research attention.

Management Control, Results-Oriented Culture and Public Sector Performance: Empirical Evidence on New Public Management

New Public Management (NPM) has been guiding public sector reform for over 25 years. Its position on the design of effective management control rests on three key ideas: (1) performance improvement requires a results-oriented culture that emphasizes outcomes rather than inputs or processes; (2) public sector organizations need to introduce performance management based on targets, monitoring and incentives; and (3) public sector organizations should decentralize decision rights and reduce their reliance on rules and procedures. Focusing on the particularly influential version of NPM as advocated by the OECD, we examine the validity of these ideas theoretically and empirically. We conclude that NPM’s reform programme should be reconsidered. Although the evidence indicates that a results-oriented culture is positively associated with performance, we find little support for the assumed benefits of NPM-type performance contracting. In addition, the results suggest that both the effects of decentralization and the reliance on rules and procedures are opposite to NPM’s expectations.

Public sector cost management practices in The Netherlands

Purpose – The purpose of this research project is to validate the claim that recent developments in the public sector have increased the demand for and use of cost management information in public sector organizations.Design/methodology/approach – The approach taken is a survey of financial managers in public sector organizations in The Netherlands.Findings – The findings indicate that the design and use of cost management systems differs across branches. In addition, the results suggest that information from cost management systems is used to legitimate the organizations activities to external stakeholders rather than to manage public sector organizations. Finally, cost management information is used mostly by financial managers yet hardly used by political managers. The results defy claims that cost management information has become important in managing public sector organizations.Research limitations/implications – All limitations of survey research apply. The survey is based on a non‐random sample o...

Are Brand-Equity Measures Associated with Business-Unit Financial Performance? Empirical Evidence from the Netherlands:

We investigate the association between brand-equity measures and business-unit financial performance. Brand-equity measures may complement historic accounting information in explaining business-unit financial performance. Capitalizing on a unique data set, we find an association between some (yet not all) brand-equity measures and contemporaneous as well as future business-unit financial performance. Our results provide important insights for both managers and designers of performance-measurement systems.

The Impact of Subjectivity in Performance Evaluation Practices on Public Sector Managers' Motivation

We conduct an explorative study to investigate the effect of subjectivity in performance evaluation practices on managerial motivation in public sector organisations. Increased subjectivity can enhance motivation if supervisors are able to provide better informational feedback. However, subjectivity is likely to reduce motivation if it reduces perceived mission clarity or negatively affects relations between supervisors and subordinates. Our analysis is based on a survey among 94 public sector managers in the Netherlands. We predict and find that subjectivity in performance evaluation practices reduces perceived mission clarity, which in turn decreases motivation. We also find that subjectivity negatively affects subordinate managers’ trust in their supervisor, which also reduces motivation. Jointly, these results indicate that the negative effects of subjectivity in performance evaluation practices outweigh its potential positive consequences, suggesting that New Public Managements focus on more objective performance measures can indeed be beneficial. By itself, however, this does not automatically imply that more objective systems in general are optimal in all public sector organisations as such systems may have dysfunctional side effects such as distortion of performance measures, gaming or manipulation. In addition, we find that the effects of subjectivity are moderated by organisational characteristics.

Are CSR disclosures relevant for investors? Empirical evidence from Germany

Purpose – The purpose of this paper is to examine whether narrative corporate social responsibility (CSR) disclosures (the provision of textual information on companies’ environmental and social performance to external stakeholders) are associated with firm value in Germany. Design/methodology/approach – Based on the global reporting initiative guidelines, the paper uses content analysis to assess the value relevance of CSR disclosures of 130 German companies over four years. Findings – The results show that CSR information is value-relevant, but the value relevance of CSR information differs among CSR categories. Specifically, the disclosure of social information is positively associated with firm value yet environmental disclosures are not. Practical implications – The results confirm that management should be aware of the potential capital market effects of voluntary CSR disclosures, even though such disclosures may be directed at other stakeholders. Originality/value – Germany is an interesting setting as CSR disclosures are voluntarily, even though the institutional environment appears sensitive to CSR disclosures. Despite this, little research has focussed upon the value-relevance of CSR-disclosures in Germany. In addition, the results confirm that management should be aware of the potential capital market effects of voluntary CSR disclosures, even though they are not directed at shareholders as such.

The Impact of Brand Value Announcements on Firm Value

U.S. firms are not required to report the values of internally-developed brands on their balance sheets. This paper tests whether brand value estimates provided by an external organism, i.e., the consultancy firm Interbrand, are value relevant. Unlike prior value relevance studies we use an event study analysis, which enables us to assess (i) whether brand value announcements have a causal impact on stock prices, (ii) what is the magnitude of the impact, and (iii) whether there are cross-sectional differences in the brand value impact. We document that stockholder reactions to brand value announcements are both statistically and economically significant. Stock prices are linearly increasing in the magnitude of the brand value change relative to the previous years estimated value.

Formal controls and team adaptability in new product development projects

Purpose The purpose of this paper is to investigate the effects of two formal controls, namely target rigidity and process autonomy, on team adaptability and project success in new product development (NPD) projects. Target rigidity refers to performance goals that are non-negotiable once they have been set. Process autonomy refers to the extent to which a project team is free to choose ways to achieve its goals. Team adaptability is considered a key factor that explains the relationship between formal controls and project success. Design/methodology/approach Two separate models related to resource and cost measures are analysed, since different target types may influence managerial perceptions. This study uses data collected from a survey with 113 project managers as respondents. Findings The findings show that target rigidity and process autonomy support team adaptability. Furthermore, team adaptability mediates the impact of formal controls on project success. The effects are more pronounced for cost targets as compared to resource targets. Practical implications Firms can increase project success by using formal controls in such a way that they allow project managers to provide their teams with motivating guidelines (target rigidity) and discretion (process autonomy) to adapt to new circumstances. Originality/value This study reveals the impact of formal controls on NPD project success through team adaptability. A balanced use of target rigidity and process autonomy may help improving NPD project success.

Tax compliance over the firm life course

This article provides a new model of tax compliance over the firm life course, focusing on the dynamics in the underlying motivations and capacities for tax compliance. We review and structure the relevant literature on the early life course of firms: the traditional stages of growth models and a less deterministic dynamic state model of developmental phases. Building on these insights on the changing nature of the firm and the role of the founder-entrepreneur, we construct a new model of tax compliance over the firm life course. We provide several potential avenues for future research as well as practical implications of our model.